Incentive-Compatible Diffusion Auctions

Incentive-Compatible Diffusion Auctions

Bin Li, Dong Hao, Dengji Zhao

Proceedings of the Twenty-Ninth International Joint Conference on Artificial Intelligence
Main track. Pages 231-237. https://doi.org/10.24963/ijcai.2020/33

Diffusion auction is a new model in auction design. It can incentivize the buyers who have already joined in the auction to further diffuse the sale information to others via social relations, whereby both the seller's revenue and the social welfare can be improved. Diffusion auctions are essentially non-typical multidimensional mechanism design problems and agents' social relations are complicatedly involved with their bids. In such auctions, incentive-compatibility (IC) means it is best for every agent to honestly report her valuation and fully diffuse the sale information to all her neighbors. Existing work identified some specific mechanisms for diffusion auctions, while a general theory characterizing all incentive-compatible diffusion auctions is still missing. In this work, we identify a sufficient and necessary condition for all dominant-strategy incentive-compatible (DSIC) diffusion auctions. We formulate the monotonic allocation policies in such multidimensional problems and show that any monotonic allocation policy can be implemented in a DSIC diffusion auction mechanism. Moreover, given any monotonic allocation policy, we obtain the optimal payment policy to maximize the seller's revenue.
Keywords:
Agent-based and Multi-agent Systems: Economic Paradigms, Auctions and Market-Based Systems
Agent-based and Multi-agent Systems: Algorithmic Game Theory
Agent-based and Multi-agent Systems: Noncooperative Games
Agent-based and Multi-agent Systems: Resource Allocation